Smartphone app spending is rocketing. Here’s what is driving it

A special chip for what ails 5G

App spending in 2021 grew 25% year on year to $135 billion, showing no signs of slowing even as there is more scrutiny of Apple and Google app-store developer rules and in-app payments.

As usual, Apple’s App Store leads in revenues, while the Google Play Store leads in app downloads. According to mobile analytics firm App Annie, Apple brought in $87.5 billion from iOS users in 2021, or a 65% share of $135 billion in total mobile app revenues, while Google Play raked in $47.25 billion, despite having a bigger user base.

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Rival analytics firm Sensor Tower’s estimates for 2021 are slightly different but in the same ballpark: mobile app spending reached $133 billion in 2021, growing 19.7% annually compared to 2020, it said.

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Both analyst firms wondered whether mobile app spending would taper off as pandemic restrictions gradually lifted.

Sensor Tower estimated App Store revenues will reach $85.1 billion in 2021, up 17.7% compared to 2020, while spending on Google Play will grow 23.5% to $47.9 billion, up from $38.8 billion in 2020.

It also estimates Google Play downloads will exceed 100 billion by the end of 2021 versus just over 30 billion from the App Store.

Relative app store downloads align with the 70% to 30% split in marketshare between Android and iOS devices in use today globally.

Mobile gaming continues to be a major force behind app spending across the App Store and Google Play, standing at around $90 billion in 2021.

Gamers spend the most of any app category, contributing around 60% of iOS revenue and nearly 80% of revenue in Google Play. The other major source of spending are users of entertainment and social apps. Entertainment apps are expected to reach $12 billion in 2022, according to App Annie.

Sensor Tower estimates mobile gamers will spend $52.3 billion globally on the App Store by the end of 2021, up 9.9% year on year from $47.6 billion in 2020. Gamers on Google Play will spend $37.3 billion worldwide in 2021, up 16.6% from $32 billion in 2020.

App Annie notes that video and editing apps saw the highest growth in 2021, driven by the pandemic and growth in TikTok usage. CapCut, for example, a video editing tool for TikTok videos, gained a lot of downloads.

In business, the growth in video usage to support WFH and hybrid work was led by Zoom, Microsoft Office and Teams.

Video streaming is also becoming more popular as 5G rollouts expand. In spending, YouTube, TikTok, Disney+, HBO Max, Piccoma, Tinder, Twitch and Google One were leaders, according to App Annie.

Sensor Tower estimates spending on Google One, for managing Google cloud storage, will reach $1 billion by the end of 2021, more than double the $448.5 billion it gained in 2020.

Installs of the Facebook app across both app markets will reach 624.9 million, down 12% compared to the 707.8 million it gained in 2020. By contrast, TikTok gained 745.9 million installs across both app stores, according to Sensor Tower.

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